A bill passed by both the U.S. Senate and House of Representatives is expected to provide relief for seafood businesses, commercial fishermen, restaurants, and others that received funding through the Paycheck Protection Program.
H.R. 1710, The Paycheck Protection Flexibility Act of 2020 was passed by the House last week, and by the Senate on 3 June. It is expected to be signed into law by U.S. President Donald Trump.
Under the bill, PPP recipients can extend the eight-week period to use the funds to 24 weeks. Borrowers can use the 24-week period to restore their workforce levels and wages to the pre-pandemic levels required for full forgiveness. They can restore their pre-COVID workforce and wage levels by 31 December, instead of the previous deadline of 30 June.
“This flexibility is designed to make it easier for more borrowers to reach full, or almost full, forgiveness,” the American Institute of Certified Public Accountants said in a statement.
Further reforming the original law, its former requirement that 75 percent of the funds must be used for payroll is reduced to 60 percent under the new legislation. Additionally, the act includes two new exceptions allowing borrowers to achieve full PPP loan forgiveness even if they don’t fully restore their workforce.
“Previous guidance already allowed borrowers to exclude from those calculations employees who turned down good faith offers to be rehired at the same hours and wages as before the pandemic. The new bill allows borrowers to adjust because they could not find qualified employees or were unable to restore business operations to 15 February, 2020, levels due to COVID-19 related operating restrictions,” AICPA said.
New borrowers now have five years to repay the loan instead of two, while existing PPP loans can be extended up to five years if the lender and borrower agree. The interest rate remains locked at 1 percent.
The legislation also allows businesses that took a PPP loan to also delay payment of their payroll taxes, which was prohibited under the CARES Act.
The Independent Restaurant Coalition (IRC) praised the passage of the Paycheck Protection Program Flexibility Act in the Senate.
“By making Paycheck Protection Program funds more flexible, Congress is giving independent restaurants a fighting chance at reopening. Republicans and Democrats put forward a bill that gives many restaurant owners some hope amidst these unprecedented times,” the IRC said in a press release.
However, even with the changes, “many restaurants will still have a hard time surviving the crisis we’re in,” IRC said. “Social distancing measures are forcing restaurants and bars to operate with dramatically reduced revenues for the foreseeable future, which will be unsustainable in the long-run. The pandemic is a long-term problem and these PPP fixes are only the beginning of a solution.”
Independent restaurants have been calling for the formation of a USD 120 billion (EUR 107 billion) Stabilization Fund to further help the industry weather the COVID-19 crisis.
Photo courtesy of Zyn Chakrapong/Shutterstock
